Aransas Pass modifies harbor bonds plan

ARANSAS PASS - The City Council decided against issuing $5.6 million in
tax-exempt bonds Monday to fund the purchase of Conn Brown Harbor land.

Mayor Frank Hametner, council members Jay Attaway, Tommy Knight and
Grace Chapa voted in favor of rescinding the notice of intention to
issue the bonds after learning it would prevent the city from leasing
harbor property to businesses on a long-term basis.

Council member Vickie Abrego was absent.

"If they issued the tax-exempt bonds, then when all the current
leases expired they could only go to a month-to-month basis including
any new leases," said the city's financial adviser Mark M. McLiney.

The rescinding of the public notice does not negate the harbor
deal.

Earlier this month, the Texas General Land Office agreed to sell 99
acres of harbor land to the city in exchange for 89 acres south of
Aransas Pass.

Under the agreement, the city will pay the land office $6 million up
front for the harbor property.

City officials had planned to fund the sale by issuing $5.6 million
in certificate of obligation bonds and then paying the remaining
$400,000 with reserve funds.

The bonds would have been paid during a 20-year-period at an
estimated interest rate of about 4 percent, said McLiney, senior vice
president with Southwest Securities, Inc.

The council could not issue tax-exempt bonds for the entire $6
million because the city is limited to issuing $10 million each year.
More than $4 million in bonds has been issued for other projects.

But McLiney said Monday the council had other financing options
including issuing taxable bonds for the whole $6 million price tag. The
bonds still would be paid during a 20-year-period but at a higher
interest rate of about 6 percent. The city would not be limited to only
short-term leases with private businesses.

"The city could use the reserve funds to make the payments," McLiney
said, adding there is not a cap on taxable bonds.

Hametner scheduled a May 7 vote on a new public notice of intention
to issue the $6 million bonds.